Nudges and Impatience: Evidence from a Large Scale Experiment

Abstract

We elicit time preferences of a representative sample of 1,102 Dutch individuals and also confront them with a series of incentivized investment decisions. There are two treatments which differ by the frequency at which individuals decide about the invested amount. The low frequency treatment provides a nudge by stimulating decision makers to frame a sequence of risky decisions broadly rather than narrowly. We find that impatient individuals are more "nudgeable" than patient ones as the effect of the treatment on investment levels is significantly larger within the group of high discounters than within the group of low discounters. This result is robust to controlling for various economic and demographic variables and cognitive ability. This finding is interesting from a policy perspective because impatient individuals are often the target group of nudges as impatience is associated with problematic behaviors such as low savings, little equity holdings, low investments in human capital, and an unhealthy lifestyle.

Keywords: narrow framing, time preferences, field experiment

JEL Classification: C93, D03, D81